Moody's Ratings has upgraded Uzbekistan's sovereign credit rating to Ba2 from Ba3, with the outlook revised to 'stable' from 'positive'. The upgrade reflects the agency's higher assessment of the country's creditworthiness, i.e., its ability to service debt and meet obligations to investors.
The agency attributed the upgrade to sustained improvements in Uzbekistan's institutional and political framework, as well as strengthened economic and fiscal prospects. According to Moody's, these changes indicate increased effectiveness of government policies and enhanced resilience to external shocks.
Moody's noted that the improvement in Uzbekistan's credit profile is supported by stable and increasingly diversified economic growth. Real GDP growth averaged 6.9% over the past three years. Strengthened fiscal discipline and improved management of contingent liabilities were cited as additional factors.
Key reforms highlighted by Moody's include improvements in corporate governance, enhanced competition, and gradual reduction of the state's role in the economy. The agency also noted the dual listing of the Uzbekistan National Investment Fund (UzNIF), which it said demonstrates the government's commitment to privatization and state enterprise reform.
According to Moody's, the UzNIF listing in May raised approximately $691 million with active participation from international investors. The agency believes this transaction also reflects growing investor confidence in Uzbekistan's reforms. However, it noted that the state sector remains large and its reduction will take time.
The fiscal deficit narrowed from over 4% of GDP in 2023 to 2% of GDP by 2025, driven by energy subsidy reforms, including a reduction in gas subsidies from 1.4% to 0.3% of GDP, tariff increases, and more targeted social assistance.
Moody's projects the fiscal deficit to remain below 3% of GDP in 2026-2028, with government debt stabilizing at around 35% of GDP. Economic growth reached 7.7% in 2025 and accelerated to 8.7% in the first quarter of 2026.
Growth was supported by investments from China, Russia, Turkey, Gulf countries, and the European Union, as well as record remittances of $18.9 billion in 2025. The agency expects growth to moderate to 6.1-6.3% in 2026-2027, but this would still be among the highest among rated countries.
Factors that could lead to further upgrades include sustained reform momentum, improved governance and institutional effectiveness, reduced fiscal risks from state enterprises and banks, and broadening of the economic growth base through private sector productivity and investment.
Conversely, significant slowdown or reversal of reforms, deterioration in fiscal metrics, materialization of contingent liabilities from state enterprises, state banks, or PPP projects, and weakening of external buffers could exert downward pressure on the rating. Moody's noted that contingent liabilities from state enterprises and PPP projects remain high at about 25% of GDP.
The rating upgrade is expected to ease and cheapen Uzbekistan's access to external borrowing. Yields on sovereign Eurobonds fell from 6.89% on May 22, 2025, to 5.43% on June 10, 2026. Spreads over benchmarks also narrowed.
According to Jasur Karshiboev, advisor to the Minister of Economy and Finance, it is important to align risk perception with actual indicators, otherwise Uzbekistan may overpay for debt. Officials conducted an internal assessment using S&P, Fitch, and Moody's methodologies and found that Uzbekistan's fundamentals already match investment-grade levels in four out of five blocks.
Source: www.gazeta.uz